Fitch Affirms Ratings of Southern Company & Subsidiaries; Outlook Stable.

NEW YORK -- Fitch has affirmed the ratings of the Southern Company and subsidiaries: Alabama Power Company; Georgia Power Company; Mississippi Power Company; and Southern Power Company. The ratings of Gulf Power Company were separately affirmed on Aug. 16, 2005 in conjunction with an issuance of senior notes. The Rating Outlook for Southern Company and all issuers in the group is Stable. The full list of rating affirmations and Rating Outlooks is below.

The 'A' senior unsecured rating of Southern Company (SO) is supported by: strong consolidated cash flow coverage ratios; stable dividend payments from electric utility subsidiaries with solid operating track records in supportive state regulatory environments; relatively limited amounts of double leverage at the holding company level; and skillful execution of the relatively low-risk regulated utility and contracted wholesale capacity strategy. The consolidated ratio of funds from operations plus interest expense to interest expense was 5.65 times (x) for the 12 months ended June 30, 2005 (including Plant Daniel lease adjustments at Mississippi Power Company). Fitch expects the ratio of parent holding company to consolidated debt to be at or below 10% of consolidated debt, which is low relative to electric utility parent holding company peers.

Fitch's rating concerns include the risks associated with: adverse decisions in regulatory proceedings or litigation; recovery lags created by rising fuel and operating costs and growing environmental compliance spending needs; and the relatively faster growth planned for Southern Power Company (SPC). While a number of constructive fuel, environmental, and other cost recovery mechanisms help reduce regulatory cost recovery lag, the utilities currently have elevated working capital needs associated with rising fuel prices, storm, and other under-recovered costs. Higher growth rates at SPC could lead to rising consolidated leverage because SPC operates with more debt leverage compared with regulated utility affiliates. SPC provided approximately 7% of the consolidated net income of SO in 2004.

There are no major rate filings pending. The $508 million fuel rate increase approved at the Georgia Power Company subsidiary (GPC) on May 17, 2005 will enable recovery of GPC's unrecovered fuel costs over a four-year period beginning June 1, 2005. A number of favorable settlements were reached for state regulatory proceedings in late 2004, including approval of an environmental cost recovery mechanism at Alabama Power Company and a $194 million (4%) base rate increase at GPC.

The Stable Rating Outlook of SO and subsidiaries incorporates Fitch's expectations that a conservative financial strategy and balance sheet will be maintained, the generation fleet will continue to perform well, and state and federal regulatory treatment will remain balanced.

The following ratings are affirmed with a Stable Outlook by Fitch as follows:

Southern Company:

-- Senior unsecured debt at 'A';

-- Short term at 'F1';

-- Southern Company Capital Funding Trusts (I-IV) at 'A-';

-- Southern Company Capital Funding Inc. at 'A';

-- Southern Company Funding Corp at 'F1'.

Alabama Power Company:

-- Senior secured debt at 'AA-';

-- Senior unsecured debt at 'A+';

-- Preferred/trust-preferred securities at 'A';

-- Commercial paper at 'F1'.

Georgia Power Company:

-- Senior unsecured debt at 'A+';

-- Preferred/trust preferred securities at 'A';

-- Variable-rate PCRBs at 'F1+';

-- Commercial paper at 'F1+'.

Southern Power Company

-- Senior unsecured debt at 'BBB+';

-- Short term at 'F2'.

Mississippi Power Company

-- Senior secured debt at 'AAA', $30 million first-mortgage bond defeased on June 30, 2005;

-- Senior unsecured debt at 'AA-';

-- Preferred/trust preferred securities at 'A+';

-- Short-term rating at 'F1+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.